The Home Equity Theft Reporter

Welcome to The Home Equity Theft Reporter, a blog dedicated to informing the consumer public and the legal profession about Home Equity Theft issues. This blog will consist of information describing the various forms of Home Equity Theft and links to news reports & other informational sources from throughout the country about the victims of Home Equity Theft and what government authorities and others are doing about it.

Saturday, February 28, 2015

Ex-Klansman Gets Nine Months On Charges Involving Interference w/ Housing Rights Of Another; Admitted To Role In Cross Burning Incident In Front Of Interracial Family's Home

From the U.S.Department of Justice (Washington, D.C.):

[Earlier this month,] Timothy Flanagan, 33, was sentenced to nine months and ordered to pay a $5000 fine in federal court in Nashville, Tennessee, for his role in the April 30, 2012, cross burning in front of an interracial family’s home in Minor Hill, Tennessee, the Department of Justice announced. Flanagan previously pleaded guilty to one count of conspiring with others to threaten, intimidate and interfere with an African-American man’s enjoyment of his housing rights, and one count of interfering with those housing rights.

Flanagan—a former member of the Church of the National Knights, a Ku Klux Klan affiliate—admitted during the plea hearing that on the night of April 30, 2012, he and two other individuals devised a plan to burn a cross in the yard of an African American man in Minor Hill, Tennessee. Flanagan’s co-conspirator, Timothy Stafford, constructed a wooden cross in a workshop behind his house.

Using Flanagan’s credit card, Stafford and co-conspirator Ivan “Rusty” London then purchased diesel-fuel with which to soak the cross. Flanagan and the other co-conspirators then drove the cross to the victim’s residence and, upon arriving at the residence, Flanagan and London exited the truck. The cross was placed in the driveway leading up to the house and was ignited. The co-conspirators burned the cross with the purpose of intimidating the African-American male who resided at that residence.

Timothy Stafford, 41, of Minor Hill, Tennessee, and Ivan “Rusty” London IV, 21, of Lexington, Kentucky, previously pleaded guilty for their roles in the conspiracy, and will be sentenced on March 3, and March 26, respectively.

Friday, February 27, 2015

Unit Owners In Failed Florida Condo Complexes Get Squeezed Out Of Their Homes As Developers Acquiring 80% Interest In Defunct Projects File For "Condominium Termination", Then Give Unit Owners The Boot

In Winter Springs, Florida, the Orlando Sentinel reports:

Shirley Lofgren, 85, is being forced to sell the sun-filled, waterfront condo she and her husband bought nine years ago for less than a third of the $217,000 they paid for it.

The sale is allowed under a "condominium termination" law passed by the Legislature in 2007.

"Nobody can believe this is legal — that they can just take your home and they'll give you what they want to give you," said the former Chicago resident, whose husband now lives in a nearby Alzheimer's treatment center.

Rep. Chris Sprowls, R-Clearwater, said Lofgren and condo owners across Florida are being "divested" of their own homes.

Under the law, developers must get an appraisal to determine the value of a home. But Sprowls said owners are left with little negotiating leverage.

"In this situation, these people are not being permitted to stay in their homes, and that's just wrong," said Sprowls, who has proposed a reform bill that would pay relocation fees and above-market value for condo owners who live in their units.

The law, passed in order to reinvigorate stalled condo projects, lets developers take title to condos when only 20 percent of the units are in the hands of individual owners.

Throughout the state since the law was passed, developers and investors have used the condo-termination law to take ownership of more than 11,000 condominiums in 160 condo complexes, according to records from the state Department of Business and Professional Regulation. In Central Florida, Enders Place at Baldwin Park, Conway Forest, Esplanade Condos, Harbor Beach, Summerlin at Winter Park and Harbor Bay Retirement Village are among the condominium projects that have gone through a wholesale change of ownership.

Many condo complexes had been apartments before converting to condominiums during the real-estate boom of a decade ago. Now they are reverting back to apartments as rental demand grows.

Outside the sliding-glass doors of Lofgren's home, the green lawn is trimmed. The developer, Prestwick Partners LLC, has painted apartment buildings cheery shades of yellows and blues to entice renters as it urges Lofgren and other remaining condo owners to sell.

Representing Prestwick Partners LLC, Miami lawyer Michael Cosculluela contacted Lofgren's family last week urging it to accept the offer to sell her unit to Prestwick. In an email, Cosculluela told them that the company is "under considerable pressure from the lender to simply file suit for ejectment [eviction]," and that if Lofgren seeks a higher price through the courts and then fails, "it will result in far less money for her unit after attorney's fees and costs."

April Woods, whose company owns a unit in the same complex, said Prestwick is attempting to acquire ownership of the units by amending the condo documents. She said she has contested it in Seminole County courts.

In Metro Orlando, the value of condos suffered during the economic downturn, dropping by more than half after the housing-market collapse. For the price Prestwick is offering, which is covered by a confidentiality agreement, Lofgren said she can find no similar condos anywhere, let alone near the Publix, SunTrust and restaurants she can now walk to. She said she has started looking at a mobile-home park off University Boulevard.

The developer Prestwick Partners LLC has offered Lofgren the chance to rent her home from it at a reduced rate.

At her condo, Lofgren walks onto her patio and fills a water bowl for a stray cat that has wandered up. She said she loves her place, which was bought mostly with cash, and would prefer to stay. She still has to pay off a $20,000 mortgage that paid for travertine tile, custom molding, granite counters and fireplace upgrades.

The octogenarian said she isn't certain that she would she have enough money left from the sale of her condo to rent it back for the remainder of her days.

Up until 2007, all the owners in a condominium project had to agree to terminate their ownership. In 2007, legislators changed the laws so that only 80 percent of owners had to agree to end their ownership.

The law became the "Distressed Condominium Relief Act" in 2010, and it helped restore Florida's bottomed-out condominium market by encouraging lenders and developers to take over the condo projects with "fractured" ownership, said Fort Lauderdale attorney Mark Grant, who helped author that legislation.

"That worked very well. Bulk buyers came in droves," Grant said.

Condo complexes had been so empty that the few remaining holdout owners were saddled with association fees, maintenance costs and taxes, he added.

Grant said some of the provisions in Sprowls' proposed bill are "poison pills" that could limit investors' appetite to reclaim challenged condo complexes. They would be more likely to encounter financial obstacles from trying to buy out remaining owners.

Grant said he is working with Sen. George Moraitis, R-Fort Lauderdale, on a compromise measure. Among other things, developers would have more opportunities to terminate ownership if condo owners initially rejected the idea.

Sprowls said that without laws in place to protect owner occupants of condos, buyers such as Lofgren are likely to shy from buying condos, and Florida's condominium market could soften.

Two Georgia real estate investors pleaded guilty [] for their roles in a conspiracy to rig bids and commit mail fraud at public real estate foreclosure auctions in Georgia, the Department of Justice announced.

Separate felony charges were filed against Mohammad Adeel Yoonas and Kevin Shin on Dec. 23, 2014, in the U.S. District Court for the Northern District of Georgia in Atlanta. According to court documents, from at least as early as April 2008 until at least March 2012, Yoonas conspired with others not to bid against one another, but instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Gwinnett County, Georgia. Yoonas was also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire titles to selected Gwinnett County properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have gone to mortgage holders, homeowners and others by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.

Shin, according to court documents, conspired with others not to bid against one another, but instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Gwinnett County from at least as early as March 2009 until at least March 2012. Shin was also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected Gwinnett County properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have gone to mortgage holders, homeowners and others by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.

“These six guilty pleas result from the Antitrust Division’s ongoing investigation into schemes to rig public real estate foreclosure auctions in Georgia,” said Assistant Attorney General Bill Baer for the Department of Justice’s Antitrust Division. “The division will continue working with its law enforcement partners to expose cartels that harm distressed homeowners and lenders.”

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Gwinnett County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage, and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.

“The criminal actions of the defendants in this case provide a clear example of why enforcement of the Sherman Act remains necessary in maintaining a level and competitive field within commerce,” said Special Agent in Charge J. Britt Johnson for the FBI Atlanta Field Office. “The FBI will continue to work with the U.S. Department of Justice’s Antitrust Division in identifying such financial schemes that attempt to take unfair advantage, to include those targeting the foreclosure auction process.”

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine. A count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine in an amount equal to the greatest of $250,000, twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.(1)

The investigation is being conducted by Antitrust Division’s Washington Criminal II Section and the FBI’s Atlanta Division, with the assistance of the Atlanta Field Office of the Housing and Urban Development Office of Inspector General and the U.S. Attorney’s Office for the Northern District of Georgia. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions in Georgia should contact Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, or visit www.justice.gov/atr/contact/newcase.htm.

(1) As has been pointed out here in earlier posts, suspects who have been pinched on bid-rigging charges and are considering copping guilty pleas should first consider whether their alleged unlawful bid rigging racket was really nothing more than an innocent, lawful joint bidding endeavor. See Illegal Bid Rigging Racket? Or Mere Innocent 'Joint Bidding' Arrangement?

Wednesday, February 25, 2015

Purported "Sovereign Citizen" Gets Three Years In Connection With Income Tax Prosecutions & Subsequent Filing Of Bogus Retaliatory Liens Against Two Federal Judges, Nebraska U.S. Attorney, Other Feds

From the U.S. Department of Justice (Washington, D.C.):

A La Vista, Nebraska, woman was sentenced [] in U.S. District Court for the District of Nebraska in Omaha to serve 36 months in prison and three years of supervised release for tax obstruction, filing a false claim and filing false retaliatory property liens, Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.

Donna Marie Kozak, a former college instructor, was convicted by a jury on Aug. 1, 2014, on all nine counts charged in the superseding indictment. At trial, the evidence showed that in 1997, Kozak stopped filing income tax returns, and from 1997 through 2012, she obstructed the Internal Revenue Service (IRS) by hiding assets, applying for tax-exempt status for a sham entity, filing a false claim for a tax refund, sending harassing correspondence to IRS agents, and filing false liens against an IRS-Criminal Investigation special agent and others.

In about 2009, Kozak joined the “Republic for the united States of America,” a sovereign citizen group, and was the group’s designated “governor of Nebraska.” In 2012 and 2013, Kozak and Georgia resident Randall Due conspired to file false liens in retaliation for the federal criminal tax prosecution and trial convictions of associates David and Bernita Kleensang. In furtherance of the conspiracy, Kozak and Due filed a false lien for $19 million on property located in Boyd County, Nebraska, that was owned by the federal U.S. District Court judge who presided over the Kleensang trial.

After Kozak was indicted by a federal grand jury for the criminal tax charges and while on pre-trial release, she filed five more false liens on properties owned by another federal U.S. District Court judge, the U.S. Attorney for the District of Nebraska, two Assistant U.S. Attorneys and an IRS-Criminal Investigation special agent. Due was tried and convicted in the District of Nebraska on related charges on Sept. 4, 2014.

Tuesday, February 24, 2015

Homeowner: I Lost Part Of My NY/Connecticut Border-Straddling Home When Next-Door Neighbor Snatched Up .2 Acre Portion Out From Under Me At R/E Tax Foreclosure Sale For $275, Then Demanded $150K For Its Return; Mortgage Servicing Bankster Seeks Negotiated Buy-Out From Tax Deed Holder

In New Fairfield, Connecticut (or neighboring Brewster, New York, depending on what side of the house you're in), The Stamford Advocate reports:

Plans to build a shed on her half-acre property led Rosanne Di Giulio to a shocking discovery.

She learned her neighbor owned 0.2 of an acre of her property, including most of her house and front yard.

"I thought I was going to be sick to my stomach," Di Giulio said Thursday. "I cried hysterically. Then I got a hold of myself."

Di Giulio's property straddles Putnam and Fairfield counties, with 0.2 of an acre lying in Brewster, N.Y. Putnam County conducted a delinquent tax auction in 2010 that led her neighbor, Althea Jacob, to purchase the 0.2-acre parcel for $275.

On the heels of her 2013 discovery, Di Giulio, 52, petitioned the court to get her property back. After 17 months of legal wrangling, a solution may be near.

The banks that held her mortgage -- the same financial institutions she thought had been paying the taxes -- are negotiating a deal to pay the neighbor for the Brewster parcel. In return, as a third-party recipient, Di Giulio would get her property back, according to her attorney, Michael Caruso, of Carmel, N.Y.

Caruso said they will be in court next Friday. Di Giulio is asking to have the "clock turned back" on her Putnam County property taxes, he said.

"This is all subject to a ruling on reasonableness," Caruso said. "Did the county act properly and did the county communicate properly with another county in another state about what was happening?"

Michael B. Karlsson II, of Wm. G. Sayegh, P.C., is representing Jacob and said his client saw a sign posted on a tree on the Brewster parcel. The sign was a notification about the tax auction and Jacob acted to "protect her home," he said.

"You don't know who is going to buy a parcel," Karlsson said. "She did what anyone would do and bought it. Who would have known that half of Ms. Di Giulio's house was included with the parcel?"

Di Giulio claims Putnam County never notified her about the delinquent Brewster taxes.

She refinanced her mortgage in 2004 and again in 2006, entering an agreement with the banks, American Homes Servicing and Chase Mortgage Services, to pay into an escrow account that was supposed to finance the Putnam County taxes, Di Giulio said.

Di Giulio filed a petition in September 2013 to overturn the foreclosure, citing lack of notice and breach of contract by the lenders.

New York Superior Court Judge Victor Grossman last March denied Di Giulio's petition to invalidate Jacob's deed and he ordered the Putnam County finance commissioner to provide proof that a foreclosure notice was sent to Di Giulio. The judge dismissed the liability claims against the lenders.

Calls to Putnam County Deputy Attorney Andrew Negro were not returned.

Tax records indicate vacant land for the 0.2-acre parcel at 46 Hudson Drive in Brewster, N.Y. The records for the 0.3-acre portion of the property at 62 Hudson Drive in New Fairfield indicate improved property and tax the house.

Karlsson said this is not unusual when a property straddles two states. It is an agreement often reached between the states.

However, Di Giulio believes Jacob had hard feelings toward her prior to buying the Brewster parcel.

Di Giulio pointed to an earlier disagreement when Jacob encroached on her property. Di Giulio said she reacted by installing a chain-link fence down the middle of Jacob's driveway to properly mark the property line.

"She'd widened the gravel driveway over the years, encroaching on my property when the previous owners had it," Di Giulio said.

New Fairfield property records show a $5,107.02 tax lien on Di Giulio's property filed last September by the state of Connecticut.

Di Giulio said Thursday she had difficulty paying bills after she was laid off from a previous job. The state tax lien on the New Fairfield parcel will be paid with her 2014 income tax refund expected this spring, she said.

Di Giulio is a former employee of The News-Times, a sister paper of The Advocate.

Rosanne Di Guilio’s kitchen, living room and porch now belong to her neighbor Alethea Jacob, 52, who snatched up .2 acres of the half-acre plot for $275 at a county auction after it went into foreclosure in 2010.

“It’s sickening. She’s an opportunist. How do you sleep when you do something like this?” said Di Guilio, a 52-year-old electrical contractor who lives in Brewster, NY, or New Fairfield, Conn., depending on which side of the house she’s on.

Rosanne Di Guilio’s survey blueprints show the the dividing line between Patternson, New York and New Fairfield, Connecticut.

Di Guilio, who is fighting the foreclosure in court, said Jacob demanded $150,000 when she tried to buy back the house after she learned of the tax snafu in 2013.

She insists Jacob schemed for access to her property to avoid fixing her own leaky septic tank. “I believe she bought it to be able to use [my] septic. It would be thousands of dollars to fix her own,” fumed Di Guilio, who has owned the home since 1997.

***

Chase will take responsibility for the cost Di Guilio will have to pay to buy back the property, she said. Jacob and the bank are still negotiating a price.

CBC News: Betrayal of Trust (A CBC investigation reveals how lawyers across Canada have misappropriated and mishandled clients money, to the tune of tens of millions of dollars, or sometimes even charging vulnerable people top dollar for shoddy services)

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